Social media is hardly the silver bullet many argue it is and, according to JD Wetherspoon’s (JDW) CEO Tim Martin, “it’s becoming increasingly obvious that people spend too much time on Twitter, Instagram and Facebook, and struggle to control the compulsion”.
As of yesterday, the 16th of April 2018, JDW has closed all its social media accounts, in a move that surprised many of my PR peers, myself included.
In an interview with Sky News, a JDW spokesperson said that “We’ve noticed a lot of MPs get trolled and some receive some nasty comments and the company doesn’t like what’s going on – we don’t like the general climate of social media.”
Ironically, JDW used Twitter to inform its followers that it is leaving social media and, to confuse matters even further, in the interview he gave BBC earlier today, JDW’s CEO further argued that he was concerned with “the misuse of personal data”.
There are, so far, several stated reasons for JWD’s farewell to social media:
- Social media addiction
- Social media trolls
- MPs’ emotional wellbeing
- Misuse of personal data
- Unnecessary expenditure
They may all be true, they may all be a lie. However, what is interesting is the fact that Mr Martin is not the only CEO to argue the value of social media engagement. In a discussion with a CEO of a business intelligence organisation during the Foresight Panel’s CEO interviews in 2016, we were told the following:
“I’m not aware of any significant business opportunity that has arisen from social media. […] I find it interesting that any company in the western world has a Twitter handle – and I’m not aware of anyone looking for good professional services on Twitter. I question the time and effort spent on social media and am confused because I think about the risk that all that energy could be put into much more efficient sources of effective communications – networking at the right level in your organisation.”
I’ve discussed the JWD situation with a Houston-based CEO today and, funnily enough, he told me that “this is going to be the future of social media. I understand, if you wish, social media for businesses whose customers are people. But for B2B or B2G, there’s no point”.
“I’d wager that a large percentage of the unanswered complaints to Wetherspoon’s accounts – and indeed many brand accounts that serve as customer service channels – would not be made if it meant speaking to a manager or having to write a letter, like those in ancient times gone by.”
Andrew Smith, someone for whom social media and SEO analytics are as easy as a walk in the park, brought home this hype of a brand “daring” to leave social media: “there is no law that says everyone has to be on social media”
Don’t forget they also deleted their entire email marketing database last June – 650k Email addresses. Feels like they are focussing on those areas where they can see proper value. There is no law that says everyone has to be on social media. https://t.co/9pI1oc00qU
— Andrew Bruce Smith (@andismit) April 16, 2018
And now that we have a bit of a background and reaction to today’s JDW “shocking news”, let’s leave the PR indignation for a moment and try to understand if there is a wider context of this sudden announcement.
In June 2016, JDW’s customer database was hacked and the details of more than 600,000 people were stolen. It’s taken JDW 6 months to make public the breach and, if GDPR had been in force then, the company would have been fined £69m as opposed to a little over £800,000.
Even for a FTSE 250 company, this is a lot of money to pay as a fine, let alone pay compensations for data breaches to more than half a million people.
One could argue that, JDW’s decision to completely delete its entire customer database last year was a wise business decision, one which could significantly minimise the financial risk to the company.
JD Wetherspoon is a no fuss pub business – social media engagement and Instagram pictures are unlikely to motivate middle class spenders or white-collar employees to go and have a full English breakfast there.
JDW’s business model is simple: high footfall, low prices. JDW is not the Ritz, nor The Wolseley. It’s a place where you go to have a drink or something to eat if you’re on a budget – and there’s nothing wrong with that.
Let’s also look at JDW’s latest financial data (2017) to gain a further insight into why this sudden move may have happened. The best source for analysis and information, as ever, is the Financial Times:
- In the last five years, their “dividend per share growth is below the industry average relative to its peers”.
- Its net profit (profit after interest and taxes) is £56.06 million. The company’s net profit would be completely wiped out since this is less than JDW’s would have been fined for its data breach had GDPR been in force in 2016!!
- Its cash reserves are £4.51 million. Given that its revenues are £1.66 billion, its cash reserves are at 0.27% of the total turnover!!! For a business with over 900 outlets, £4.5 million in cash reserves is very little to meet unplanned, short-term financial needs.
For a business that has a high turnover, low gross profit margin, even lower net profit and providing a service which caters for a certain socio-economic profile, the financial risks associated to potential data breaches, cyber-security upgrades, and even social media channels may not be worth it the conventional form of brand engagement.
It’s better not to have a social media presence as a consumer focussed business than to have one and be non-engaging – it can lead to enraged customers and it may force the company to publicly state what steps for improvement it will make (in the case of disgruntled punters) and, if no improvements/changes are made, it is almost certain that its customers number will grow smaller.
We should also remember that social media is a medium of truth as much as it is one of lies: how likely is it that the customer service one would get in a Wetherspoon’s, corroborated with the exceptional quality of the food and drink there, would prompt its punters to go into a social media frenzy over the “jacket potato with coleslaw”? Highly unlikely.
Equally, how likely is it for the social media users to be outraged by the fact that the level of service and/or the quality of food in a Wetherspoon’s has been below expectations? Very unlikely.
I’ve been to a couple of JDW’s myself – I found nothing wrong with the food (I can’t comment about drinks) there.
It was just as I expected.
In business, some of the key rules are to manage expectations and minimise business risk – by deleting its entire customer database and leaving social media yesterday, JD Weatherspoon ticked those boxes.